Student debt for those from impoverished families

[WestCoastNative]

Does everyone in medical schools get at least some financial aid? If you come from an impoverished family (less than 25 grand a year), will it be hard to get most of the school payments covered (excluding getting your own place, food, etc...)?

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[rmitchell13]

If you are a independent student I believe you get around 226,000 from financial aid..But if you borrowed money from undergrad it's reduced.

 

[mcloaf]

Pretty much everyone can get fin aid up to cost of attendance in the form of loans. Depending on the particular school it sounds like you'd have a good shot at need-based grants as well.

 

[WestCoastNative]

I realize that I'd be able to get loans, but how about grants? Are they not realistic? There's no way I'd be able to get any financial help from my family and I'm fearing that my medical loans will be enormous due to this. Rmitchell, what do you mean by independent? When I'll be applying to medical school, I'll still be living at home with the 'rents.

 

[Pacna]

One of the financial aid presentations I attended said "If they get accepted, nobody doesn't attend because they can't afford it. We'll find a way for you to be able to come here." I think this is fairly common (no empirical evidence for it, but I haven't heard any horror stories).

 

[TheWeeIceMan]

Does everyone in medical schools get at least some financial aid? If you come from an impoverished family (less than 25 grand a year), will it be hard to get most of the school payments covered (excluding getting your own place, food, etc...)?

You will be able to borrow enough to cover everything through student loans. Medical schools don't throw around need based aid to the extent of most UG institutions. If a school does give out need based aid, you will likely fall into the group that would get it.

A very large portion of medical students finance everything through loans with no outside help.

 

[TheWeeIceMan]

One of the financial aid presentations I attended said "If they get accepted, nobody doesn't attend because they can't afford it. We'll find a way for you to be able to come here." I think this is fairly common (no empirical evidence for it, but I haven't heard any horror stories).

They will probably just refer everyone to their good friend, Mr. Stafford.

 

[knv2u]

Does everyone in medical schools get at least some financial aid? If you come from an impoverished family (less than 25 grand a year), will it be hard to get most of the school payments covered (excluding getting your own place, food, etc...)?

Most medical schools are stingy with institutional aid if it is awarded at all, and most figure that with a physician's salary, you will be able to comfortably repay your loans. You can borrow Stafford Loans (need based, lower interest rate than PLUS loans) up to a certain life time total. Everything else must be financed through Graduate PLUS Loans. You can borrow as much as you need to pay for the cost of medical school (up to the cost of attendance which factors in living expenses).

 

[knv2u]

If you are a independent student I believe you get around 226,000 from financial aid..But if you borrowed money from undergrad it's reduced.

The cap applies only to Stafford Loans in this case. The original poster can borrow up to the entire cost of attendance in PLUS loans.

 

[HelpPleaseMD]

you won't get grants because your family is poor only if you are extremely accomplished.

 

[mcloaf]

you won't get grants because your family is poor only if you are extremely accomplished.

This is not true. Some schools offer need based financial aid grants.

 

[HelpPleaseMD]

Stand corrected.

 

[rfvbnmju]

You'll be able to pay off your debt. It may take 7+ years living on 40k/yr.

Sent from my phone.

 

[sazerac]

You'll be able to pay off your debt. It may take 7+ years living on 40k/yr.

Sent from my phone.

Or you could live like a king, just make the minimum payments for 20 years, and then the government will pay the loan off for you.

It's a free country. Do what you like.

 

[sinombre]

Or you could live like a king, just make the minimum payments for 20 years, and then the government will pay the loan off for you.

It's a free country. Do what you like.

...wtf

 

[BlueLabel]

...wtf

He was going on about this in a different thread... I still don't think most attendings actually will end up qualifying for PAYE under "partial financial hardship", AND it doesn't address the tax bomb.

In any event, the good news for the OP is that one way or another, money won't stop him from getting through medical school.

 

[astromfs]

Buch of people from all different economic levels entering med school will take the same amount of loans, live the same frugal life and have similar amounts of debt.

 

[Mad Jack]

Or you could live like a king, just make the minimum payments for 20 years, and then the government will pay the loan off for you.

It's a free country. Do what you like.

Slight problem with that is you owe a massive tax bill to the IRS, due immediately if you would like to avoid bankruptcy and PMITA prison. If you end up with a 550k discharge, you will owe over 200k in taxes.

 

[sazerac]

Slight problem with that is you owe a massive tax bill to the IRS, due immediately if you would like to avoid bankruptcy and PMITA prison. If you end up with a 550k discharge, you will owe over 200k in taxes.

The amount of discharge is limited to your net worth - the IRS won't tax you on $550k of phantom income if your net worth is only $100k. The most you would ever be penalized is a third of your net worth, assuming 33% taxes on the income.

In the event that you really are hit with $200k in taxes, you could save for that by saving less than $850/month, which is a hell of a lot less than paying off your loans in full.

 

[Mad Jack]

The amount of discharge is limited to your net worth - the IRS won't tax you on $550k of phantom income if your net worth is only $100k. The most you would ever be penalized is a third of your net worth, assuming 33% taxes on the income.

In the event that you really are hit with $200k in taxes, you could save for that by saving less than $850/month, which is a hell of a lot less than paying off your loans in full.

If you're living like a king, you'll have a net worth high enough to pay it. The other problem is they could rescind the program at any time to save the government money, in which case you're on the hook for everything. Lastly, having such a massive debt to income ratio will devastate your credit rating, if you care for that sort of thing.

 

[TheWeeIceMan]

The amount of discharge is limited to your net worth - the IRS won't tax you on $550k of phantom income if your net worth is only $100k. The most you would ever be penalized is a third of your net worth, assuming 33% taxes on the income.

In the event that you really are hit with $200k in taxes, you could save for that by saving less than $850/month, which is a hell of a lot less than paying off your loans in full.

If you are a 50 year old physician and your net worth is only 100k then you made some serious mistakes. Chances are, your net worth will be high enough to make the tax sting.

 

[sazerac]

I mentioned the built-in loan forgiveness because it's clear that a lot of folks are not even aware of the programs built into their federal student loans. You can pay off the loans early or not; like I said, it's a free country.

Life and plans appear one way when you are a pre-med, but 10 years down the line when life takes over and you are presented with a choice to spend an extra $2,000 a month on loans which will be forgiven, versus spending that on a house for your growing family, education for the children, or support of your parents, then you will likely make different choices than you predict today.

The required payment for a federal student loan is 10% of your income over the first 20 years of employment. The first 20 years' projected income for most physicians is about 4 million dollars. Therefore the required amount that you are likely to pay for your student loans is on the order of $400,000 (no matter what the size of your original student loans), plus whatever we collectively predict the federal tax laws might be 25 years from now in the year 2039.

 

[WestCoastNative]

Speaking of, isn't it realistic to pay off your entire medical school debt in 3/4 years? Let's say you graduate with 300k in loans, and while attending residency you don't pay any of it at all. By the time you finish a fellowship you'll have around 400k in debt due to interest (idk how accurate this is, but for the sake of the argument let's say that it's 400k). So you start making 300k (specialized specialty..), and you live on 50k a year. You'd have 250k left over, not including taxes. Let's say another 100k gets dropped due to taxes. So, wouldn't this be possible if you drop the remaining 150k on debt?

 

[TheWeeIceMan]

Speaking of, isn't it realistic to pay off your entire medical school debt in 3/4 years? Let's say you graduate with 300k in loans, and while attending residency you don't pay any of it at all. By the time you finish a fellowship you'll have around 400k in debt due to interest (idk how accurate this is, but for the sake of the argument let's say that it's 400k). So you start making 300k (specialized specialty..), and you live on 50k a year. You'd have 250k left over, not including taxes. Let's say another 100k gets dropped due to taxes. So, wouldn't this be possible if you drop the remaining 150k on debt?

Sure, you can pull it off in 3-4 years. It certainly won't be easy, but if you have the discipline to live like a resident on an attending's income, it can be done.

 

[WestCoastNative]

Sure, you can pull it off in 3-4 years. It certainly won't be easy, but if you have the discipline to live like a resident on an attending's income, it can be done.

Honestly, 50k seems like a ton of money compared to what I'm used to seeing. I'd say 35k a year is pretty damn good.

 

[saveourpens]

Amount of needs based aid money largely depends on the school. Some are much more generous than others. I may be a little off but I believe a needs based scholarship at my school (depending on a student's finances) can cover as much as 70-80% of tuition.